tv Bloomberg Markets Americas Bloomberg March 21, 2019 10:00am-11:00am EDT
2:00 p.m. -- it's 10:00 a.m. in new york, 2:00 p.m. in london. from new york, i'm vonnie quinn. guy: in london, i'm guy johnson. this is "bloomberg markets." vonnie: the market is looking positive .1. 1% forup about 2/10 of each of the indices. that data will add to the idea that perhaps not all of the data is weak. fomc members17 saying there won't be any other rate hikes this year, up from just two in december. saying this morning that yields should be within the 2.4% to 2.6% range if that is the case. indeed, we did see yields come down.
look at the 10 year right now at 2.52%. a good eight point basis point move overnight. the dollar index recovering some of last nights losses -- some of yesterday's losses overnight. plenty of stocks moving. one major drag today is going to be biogen. it is attracting the wrath of after an outsider treatment didn't appear to be working after stage two. we will be speaking about that in a moment. stoxx 600 got the down by 2/10 of 1%. the reason for that is that the banking sector is really down quite hard today. deutsche bank trading down circa 3%. the sector as a whole down by 1.5%. one of the factors behind that is what is going on in the rates environment.
a huge move in the german yield curve today. bunds moving very sharply to the upside. yields coming very sharply to the downside. now trading just four bits on the german ten-year. that curve very bad news for the banking sector around europe. we are seeing a similar story in the unit states as people voiced concern about -- in the united states as people voice similar concerns about what is happening there. the rally we've seen in sterling is unwinding fast. 64. cable rate trading 1.31 plungingiogen shares now. we are joined on the phone by head of research. you say it will go down as one
of the biogen industries great follies. that is a big indictment of the treatment. why did it take so long for the street to see through this? guest: the brain is the last frontier in terms of treating serious disease. progress, a lot of but really the brain for a variety of reasons is the final frontier, and it is proving very difficult to treat these diseases. biogen took a huge swing at the prevailing hypothesis, which was the beta-amyloid basis for the progression of the disease in alzheimer's. they, like many pharmaceutical companies before them, failed spectacularly. it is a huge disappointment for patients and their families, but
nevertheless a failure is what it is. we will have to move on and look for a new hypothesis to explain this devastating disease. vonnie: you have been cautious about the stock rating. we will keep an eye out for any adjustments. showong will investors biogen there wrath? is there something new that could come out of its pipeline? guest: what we are seeing in the big opportunity in the pipeline. biogen has three major developing programs focused on thee, lloyd hypothesis in alzheimer's.
all three of those are now subject to question and probably won't go ahead. at least the company with a pipeline that has been very bear, they have been making calls outside the company to acquire emerging products that might a synergistic with their portfolio. them investors might like to turn around and deploy their cash flow into such opportunities, it is going to take a while. this is a major setback. we expect there will be changes at the company, in management, maybe even in the board. investors are going to be in livid and demand those changes. guy: can i come back to the science for a moment and the peptides you're talking about? your theory is that that route is now over and done with. the question i'm asking is others are trying to go down the similar road. roche in particular has been going down that road. do you think roche is going to have any more success? guest: roche recently announced one of their programs targeting beta-amyloid was halted for a futility analysis. this was not more than six or eight weeks ago. that program was discontinued.
roche still has another antibody in several pivotal trials. i don't think roche will halt those trials, but it is certain those will be subject to the same stringent futility analysis. if/when they get to a certain point in those studies, they don't need that futility analysis and they, too, will be canceled. these drugs have risks associated with them as well. by encouraging patients and their families to participate, you subject the patience to those risks. that's what we have seen. we've seen failures here. all of these companies have halted their programs. roche is really the last stand out. i think they are going to have to look hard at their program when they come to that futility analysis. an m&a biogen now target? guest: it would have to be.
we think the revenue is going to be flat to declining for the foreseeable future, and that is a pretty uncomfortable place to be. it is not a particularly attractive stock for investors. they are going to either have to restructure their portfolio and selloff pieces or a very active some in the market and add growth opportunities. i think investors will give them a very short leash. there will be a significant change in this company's portfolio one way or another over the next six to nine months. vonnie: thank you for joining us this morning. porges of svbey leerink. guy: let's turn to india. tensions with pakistan could intentionally harm investment.
the country will also go to the polls soon. joining us is india's secretary of economic affairs for the ministry of finance. good afternoon. thank you for taking the time. money has been pouring into india, foreign money, over the last few months. it is forcing the rupee higher. are you comfortable with the level of the rupee right now and the strength we are seeing? the central bank does seem to be. investment have been plumbing in steadily in india for the last many years. this year was not different, despite the oil price rises which we saw very heavily in the first half. but the portfolio investment did see major outflow in
the first half when the oil was rising so fast, but the last equities weeks the have seen major inflows, and outflows have also stabilized. i don't think it is much to do but the pakistan situation, it is broadly based on a number of factors, oil being one, the economy doing well. there's possibly some sort of confidence in the community of global investors that possibly they will see stability going forward. guy: mr. secretary, the expectation seems to be among foreign investors that mr. modi is going to win the election and provide that stability. it is not a foregone conclusion,
though. should india be ready for some volatility in sermons -- in terms of some of those flows? sense a also get the lot of people who are waiting on thatidelines, thinking money was in a waiting game, haveof them seemed to thinking that risk was somewhat higher than not investing. --tainly [indiscernible] ofon't see a large amount volatility being built. i guess we should wait for the and see howome
things get there. vonnie: last week, 108 economists from around the world raise questions about political influence on high-frequency data out of india. how do you respond to that? have very clear advice on that. did you to be dated was the highest the last couple of -- the gdp data was the highest the last couple of rounds. data is based on facts, actual data inflow. it is not based on any presumption or anything. appear to be meeting people's expectations, but that is based on the real
data. so i don't think it should be suspected. it is there for everyone to see. the fear is the gdp has been somewhat revised downward based on the revision the last two years upward. so it is not that any revision that is done has positive messages all over. the current gdp is revised down because the base has gone up. don't think it makes good sense to dispute or doubt. it is based on the real data. vonnie: obviously the rupee has made substantial gains recently. also on for at is
record bond sale. how do you see investor appetite? guest: my sense of the outside long term , that is not extremely affected by the election outcome, so to say. therefore, their view about fundamental strength of indian economy is a bigger factor than the election. increasingly from the from the fdiestors and portfolios. something close to $500 billion of investment has been made by the portfolio investors.
that shows enormous amount of confidence of long-term investors in indian economy. might make some small difference here and there, but the long story of india is very much steady and intact. vonnie: mr. secretary, thank you. subhash chandra garg. let's check in on bloomberg first word news. here's kailey leinz. kailey: british prime minister theresa may is gambling on a desperate bid to get her brexit deal through parliament. today at the european union summit she is looking for a one time three month delay for the departure, but they have already said she can't have that unless she can persuade parliament to back her agreement. they plan to put it to another vote next week. new zealand is imposing a partial gun ban in the wake of last week's deadly mosque
attacks. automatic and semiautomatic assault style rifles are now illegal. prime minister jacinda ardern says it will go into effect immediately to prevent buyers from going out and stockpiling the guns. in the netherlands, the suspect in a deadly tram shooting face terrorism charges. three people were killed in the attack, three others wounded. prosecutors are still looking to whether the suspect's actions were caused by personal problems combined with a radicalized ideology. the university of notre dame leads top schools in admitting alumni. children of outside of the top 25, baylor led with 32%. legacy applicants generally have an edge on other students. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. guy: thank you very much indeed.
we are continuing to watch what is happening in brussels. we are just seeing the austrian prime minister speaking to reporters. i think he's just beginning to move away. we are also watching what is happening in parliament. the action in brussels today come up proletarians -- parliamentarians incensed by the speech last night from theresa may. we will continue the coverage of what is happening with brexit. this is bloomberg. ♪
for a look at those markets, abigail doolittle is with us. abigail: we are looking at mixed action in the u.s. and globally. the s&p 500 up 3/10 of 1%. 2.2%.oxx up the biotech index down. the german dax down about 7/10 of 1%. not a firmly risk on or risk off picture. after the fed policy decision yesterday, going into that we had the futures lower, then higher as investors were taking note of the dovish tone, then lower, now flat over the last two days. lots of uncertainty. it will be interesting to see how it resolves. as for the big chips and biotech movers, micron up 8.6 percent after they beat estimates despite the fact that they lowered outlooks.
investors like that because they think it is more realistic. biogen plunging. the biotech giant is not going to be participating in its alzheimer's drug trials anymore after does appointing results, off of 1/4 of the value this company come of the worst day since 2008. we've been looking at a trading envelope in the bloomberg. this is a more need her -- more near-term look over the last six months or so. we have the s&p 500 within this range, even capturing the volatility of the fourth to the downside, and then to the upside. the other day investors getting excited, but now back down. this does suggest we are likely to go back down to the bottom of that range. we will be keeping an eye on that. finally we have the banks getting hit here in the u.s.. that is true, too, in europe. basis points four at four basis points.
we of course have the banking index, and a few of the main banks in europe trading lower. interesting to take note of that as a drag on some of the indexes. guy: absolutely. as you were mentioning, we are certainly seeing the semiconductor sector and focus today. micron, the spotlight back on this company. we will take a look at what is behind the latest market moves in that company. that is coming next, stock trading 8.5% to the good. this is bloomberg. ♪
♪ vonnie: live from new york, i'm vonnie quinn. guy: in london, i'm guy johnson. this is "bloomberg markets." let's turn our attention to what is happening in the factor universe. tech stocks in favor of a more defensive set of names, making strategy look more like a low volatility fund. here was more is tom sarah fake
with bloomberg intelligence. alwaysr: momentum is changing depending on what is happening in the market. it is backward looking. we had a very sharp decline in the fourth quarter. all of those changes are getting picked up in these momentum funds. it used to be very tech heavy. it is now focused on health care, stables, utility. there's very defensive positioning in momentum. you see it more and more looking like a low vol fund. vonnie: how strong is the current relationship? reporter: it is very strong, one of the strongest we've seen. typically what will happen after a downdraft in market, they tend to converge a little bit. the market goes up, they pull apart. just as we had such a short
decline --artres such a sharp decline in the fourth quarter, usually it will spike and go back down, but it is actually a very sustained long correlation. the relationship between low vol in momentum is very strong right now. guy: i guess we should explain what momentum is at some point as well. it is basically what does well will continue to do well. reporter: it is anything that's done well, momentum says we are going to go by those names. momentum is really just trying to pick up on those trends. guy: nice to see you over here. tom, nice to see you. tom joining us from bloomberg intelligence. you can check out all the factors on your bloomberg. ftw is the function.
kailey: president trump will sign an executive order today aimed at improving free speech on college campuses. the president has said he would required colleges to support free speech if they want to continue getting federal research dollars. it is not to your how the executive order will work. a new twist in the investigation into the two boeing 737 max 8 crashes. officials wanted to know why regulators approved a software system linked to the accident. they also asked why boeing didn't like the system in pilot manuals -- didn't flag the system in pilot manuals. farmers are paying the price for some of the worst flooding in the midwest. crop losses could go over $1 billion. were facingady falling income and the fallout from president trump's trade policies. one week after a cyclone hit coastal mozambique and swept across zimbabwe, the death and
flooding continues. beene villages have submerged and heavy downpours are hampering rescue efforts. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. washington, d.c. and the entire universe is waiting for special counsel robert mueller to submit his report on russian interference in the 2016 presidential election. joining us with more is greg farrell. we know we should be getting this report very shortly. rather, william barr will get the report. he will then issue a summary, and after that it is a question of substance and process. talk about the process of how we might find out what is in that report. reporter: as you pointed out, it doesn't go to the public or congress. it goes to the ag.
he is going to read it and determine what he was to submit to congress. this is not an abstract question. if he decides to sit on this for weeks,d of time, days or or puts together a small, brief summary, there is going to be political pressure and a political assumption that something is being hidden. there's going to be a lot of pressure on him to share as much as possible, including what president trump said, mainly that he'd like to see the mueller report sent out. that is the first thing that is going to unfold over the days and possibly weeks to come. guy: you talk about the idea that the president wants this report sent out. he talked about yesterday on the way to andrews. are we starting to get an understanding of how the president's team thinks it can get through this? can we get an understanding of what the tactics are going to be from the white house? greg: i think they have
telegraphed that. rudy giuliani said they were going to come up with a counter report. i think they probably have an idea of what is in the report, but the devil will be of the details. once we see that, the message might change from the white house dramatically. that's why there is so much anticipation about this report hitting today or tomorrow or whenever it is going to come. hearing inr, and his january, said a sitting president cannot be indicted. greg: i don't think miller is going to go to that point. if you look at the original order that he was appointed to do, it was to investigate russian interference to the extent necessary and prosecute any crimes he saw fit. his goal was to determine and illuminate what really happened between the trump campaign and russia. his goal isn't to indict the president of the united states. so i think mueller, based on his
history, is going to stay squarely within the confines of determining it and basically leave this political question for congress to deal with. in other words, if you people think there were crimes or inappropriate behavior here, it is the political process in congress that plays this out. guy: you talk about the politics. that was a cnn poll indicated most americans would like to see the report published in full. clearly there may be national security areas which may need to be redacted. nevertheless this is going to be a political story as well. we do have an election coming up. how is it going to play politically rather than legally? greg: there's going to be enormous pressure to make the maximum amount of this report public. i think no matter what the merits of the case are, this will cease being a legal question and become a political question. i think the report substantially has to be made public in order
for the administration to be swatto swap down -- to down the claims that some thing is being covered up or hidden. there will be enormous pressure on attorney general barr to make as much public as possible. vonnie: greg farrell, thank you. we will come back to you when we get word that the report is on its way. thank you. guy: let's go to brussels and the battle over brexit, certainly underway as eu leaders gather for a summit. theresa may putting hopes on her trip to avoid a no deal brexit. you can see donald tusk sitting down within the meeting room. he is the head of the council. the leaders are sitting down, the photo op taking place at the moment. maria tadeo joins us from brussels with the latest. what do we understand about what theresa may is going to be offered? the u.k. is seeking a three month extension. what is she going to get?
there's a lot of frustration here, especially after that speech she gave yesterday night, which, in the eyes of the european union, the prime minister appeared to be blaming everyone but herself. she has asked for a short extension until the end of june, but the eu will be crystal clear tonight that doesn't work because it clashes with the european elections. the only thing we could possibly give is the end of may. anything beyond that would be breaking our own rules, and we are not going to go for that. vonnie: maria, what will we have learned by the end of today. how will we be better off? i think we just learned something pretty significant when i asked the french -- frenchemmanuell .resident emmanuel macron
the u.k. cannot agree on a solution to this and this is all we can offer. we've done our bit. now it is down to the u.k. parliament. if they reject it one more time, we are headed to a no deal. we do respect the vote of the pretty people. we do respect what the prime minister and parliament are making. , anwe have to be clear extension is in case of a yes vote on the agreement we voted on. , directly a no vote it will guide everybody to a no deal. that was the french president emmanuel macron. i do deal brexit. -- a no deal brexit.
the french are already prepared to veto this extension tonight. that is speculation according to the french president. guy: there seems to be a growing sense if you listen to some of these eu leaders that they have decided the eu is now ready for a no deal brexit. no deal brexit is not the risks that it once was to the eu. are you picking up on the same thing? maria: i think there's two camps. emmanuel macron was very clear when he answered that question. he said france is ready, and i want my country to know that. leaders are talking to two different audiences. they try to put a message to the u.k. public that this is very serious, but they also need to play tough to their domestic audience. you do hear from other countries like austria that this is a bad thing, to have a no deal. it would have very severe economic ramifications.
at this point, no one knows what they would look like. the dutch prime minister is one of the few friends prime minister may has left in the eu. he will tell you the minute we go no deal, nobody knows where we are headed and nobody knows the economic impact it could have on both the u.k. and the eu. vonnie: jean-claude juncker said if the deal failed, there would be another summit next week. can the eu leaders afford to be putting their time into this? angela merkel and emmanuel macron have problems of their own. maria: emmanuel macron has many problems back home. there are very extreme protests that pretty much take place week-out. angela merkel will be on her way out. that is one of the big concerns here. they don't want brexit to hijack the political agenda and turned
the european elections, which they need to reset their own political agenda, into another eu yes or no. that emergency summit has not been confirmed yet, but i have heard many experts today that we seem to be headed for one at the end of next week, which could come maybe on brexit day or the day before. it definitely seems to be like we are headed to almost that brexit deadline before we get a resolution to this. guy: why make it easy? maria, thank you very much. maria tadeo joining us from brussels. as we can see, it looks like the meeting is now underway and behind closed doors. we will continue to monitor events from that summit. we are expecting there will be a statement from prime ministers theresa may a little bit later on. of course, we will bring that to you. the pound trading at session lows. this is bloomberg. ♪
♪ vonnie: time now for the bloomberg quick take. today we are looking at whether japan should rethink ists 2% -- 2% inflation target as side effects start to pylon. it's target has been 2% since 2013, when bank of japan agreed to work towards that goal in conjunction with prime minister shinzo abe's plan to revise the economy. the boj governor has vowed to do whatever it takes to reach 2% inflation. he induced negative interest assetand embarked on an interest program. touchedr japan briefly 1% inflation before dropping off. this painfully slow pace has
some economists, politicians and business leaders questioning japan's strategy. they say six years of aggressive monetary stimulus is hurting parts of the economies, robbing returns, pushing bank profit margins, and keeping unproductive companies alive. one of the biggest market impacts has been a weakened yen. that helps japan exporters send corporate profits soaring and lift's stock prices shortly higher -- and lifts stock prices sharply higher. if the boj weakens its commitment to the 2% target, the yen could rally. you can read more about japan and all of our quick takes at quick on the bloomberg. guy: let's talk about what we need to know in the business world right now. time for a look at some of the biggest business stories in the news right now. let's kick off with
international hospitals operator bps health care. it is having second thoughts about listing in london because of brexit. bloomberg has learned the company is also considering the u.s. and singapore. bps now has plans to push back its ipo until next year. indonesia's lion air is seeking towards an ipo that could raise around $1 billion. that would make it indonesia's third-largest public offering ever. and rolling back and ambitious plan for china, the ceo cutting a future target for sales by around 8%. that revision signals a downturn in chinese auto sales may be an extended one. that is your bloomberg business flash. vonnie: still ahead, we want to pick a look at how oil is moving it day after the fomc futures -- the fomc.
♪ guy: live from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." , your trip -- memory chip demand is stalling. why are we getting this now? do you believe micron management when it says secondhand demand is going to be very strong, cloud server demand is going to come back, potentially mobile is going to do better in the second half, and that demand is enough? that is very key to offset some of the growing supply we are seeing both in the two kinds of memory that micron makes. think the dram problem is
surmountable. we think the supply cuts they have in place could potentially offset growing demand from the cloud. we are a little more skittish on nand. the reason for that is basically this is a commodity industry where supply and demand balance drive pricing, which in turn drives revenue and profitability for companies like micron, samsung. the interesting thing is the cloud server demand has been lumps. to buy in we are in the dark period right now. we are hoping demand comes back in the second half of 2019. in the case of nand, which is the memory used to store images c., itdeos and music, et is heavily driven by the mobile phone segment. there high-end phone demand is
weak and high-end phone capacity is a very high. we think nand has a bigger problem than the ram -- then dram, but we are concerned supply cuts are insufficient to balance supply and demand in the second half of 2019. guy: before we come back to the subject, this is worth highlighting. we just had breaking news over the last minutes. the ex-president of brazil has been arrested on corruption charges. we are keeping a very careful eye on what is happening here. the markets certainly under pressure on this report that he has been arrested. we will come back to this in a few minutes' time. let's return back to what is happening with micron. anand, the operating environment is very tough. how well is micron executing within that environment? i've read a whole lot of analyst reports today that paint a
really bleak picture of what is going on here, that micron is doing a little better on pretty bag expectations -- on pretty bad expectations. d: expectations were pretty dismal. next quarter gross margins will be down substantially. let's compare and contrast this to micron five or 10 years ago. they are substantially better. you've got to give them credit for that. the industry has also consolidated dramatically. only the strongest four suppliers have survived. that said, it is still a supply/demand balance perspective. the number of controlling vectors that a company like micron has in dram is mostly one dashboardin the nand to balance supply and demand, there's more dials on that. we think dram is more controllable, but nand is a little more complicated.
we think that specifically within the mobilephone business, it is going to be weak. that is going to continue to drive oversupply. the interesting thing is that in their quest to control supply, they are also turning to advanced production. in doing advanced production, the increase supply and relieve cost. it is kind of a darned if you do, darned if you don't in nand a little more than dram. the bottom line is there is still too much supply. we think dram cuts are ok, but nand cuts may prove insufficient for 2019 balance. thank you for always explaining to us what is going on with these chip stocks. that is micron today. want to recap some news out of brazil. 1.6%lian markets are lower
now. the reality also tumbling -- the rial also tumbling on a report of ex-president -- report of the arrest of ex-president temer. markets not liking that he has been arrested, according to reports. guy: that market has been on a real tear of late. let's turn our attention to what is happening with china. chinese internet giant tencent closing down almost 2% in hong kong, for percent in europe -- 4% in europe. emma chandra is here with more. they are basically having to spend more to drop the top line. emma: that's right. they are missing estimates by some $3 billion, and the culprit is increased spending, the scale of which surprised her number of
analysts and investors. we've got a chart which shows the revenue. in the third quarter it came in over 170 billion yuan. the company saying it is having to invest in cloud computing and e payments and various other investments to keep up with its competition with alibaba. guy: and diversify away from games. thank you very much,, tundra with our stock of the hour, chandra-- thank, emma with our stock of the hour, tencent. let's turn to futures. we've got bunds trading at four bits. we got treasuries flirting with the 2.50 line. that yieldstation go lower, prices higher? guest: the key is that the fed realized they are neutral, but they may have even moved towards
more of a symmetrical policy where they would be just inclined to ease and tighten when conditions warrant. i think the yield curve is what interests me the most. what we will look forward to is healthy fed determines the mix of balance sheet holdings, which are currently at nine years as opposed to four years back into thousand seven, and outstanding 2007, andebt -- in outstanding treasury debt at six years. that is more of the play i have. that maybe it will hold at the 10 basis point level and widen from there, but i think there will be more in locations for the curve then the absolute direction of rates. guy: is the mci sticking north of 60? guest: i think so. you saw the stocks coming down with refinery demand. even the flooding on the mississippi river and so forth.
spreads blew out the 20. with opec holding the line, i think all looks good. big targete next date when we see those sanction waivers come due. the saudis didn't seem but they are in any hurry to cut production. they got fooled in november. goodnk things look pretty for the next several weeks. guy: tim, thank you very much indeed. limitedolland from tjm joining us from the cme. power," "balance of followed by "the european close." this is bloomberg.
headquarters, i am david westin, welcome to balance of power. today, from washington on president trump's visit with top ceos. and e.u. summit and prime minister may's plea for more time. and greg farrell on bob mueller's expectation. let us start in washington. the president is going to the business roundtable to sit with the ceos. they said they do not think it is going the right direction. kevin: president trump when he delivers that message it will be interesting to see what reception he receives. it comes at a time at which the president has been taking heat from the business community, including large financial institutions that help to make up the business roundtable. have on the decision to tariffs. we shou